REIGATE and Banstead Borough Council has proposed a rise of 5% for its share of the overall council tax bill for 2009/10, blaming a "derisory grant increase from [central] government".

A rise of 0.5% in funding from Westminster has left the local authority needing to "balance the books".

Council chiefs have pledged that local services will not suffer as a result, but they admitted that the shortfall could see the borough’s share of council tax going up by 5%, the limit at which the government set its capping level for the current financial year.

The council tax cap for 2009/10 has not yet been announced, but Local Government Minister John Healey recently told the Financial Times that he "would expect to see council tax rises substantially below 5%".

Councillor Richard Wagner said: “We have needed to make substantial savings because the rising costs of providing services far exceeds our derisory grant increase from government, which is in effect a funding cut.”

The council's provisional budget, which will be discussed at a meeting next Thursday, would put the Band D average for the authority's share of the annual council tax bill at £193.32 (up from £184.69), or £3.73 a week.

The rest of the bill goes to Surrey County Council and Surrey Police.

Councillor Brian Stead, chairman of the overview and scrutiny committee, said: “We have examined the council’s budget and the way it delivers services to ensure that areas where it could make efficiency savings or improve effectiveness have been checked, so that we can try to minimise the knock-on effect on council tax payers.”